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ZACCI blames kwacha fall on government's pronouncements

ZACCI blames kwacha fall on government's pronouncements
By Chiwoyu Sinyangwe
Sat 31 Mar. 2012, 12:00 CAT

POLITICAL uncertainty emanating from the PF government's pronouncements and decisions is causing the kwacha's current depreciation which is hurting local businesses, says ZACCI chairman Geoffrey Sakulanda.

The local currency which has been under pressure since August 31, 2011, was last week left nursing its worst loss of the week against the greenback depreciating to K5, 400, the lowest ebb in the last 18 months.

Sakulanda also said the forthcoming rebasing of the local currency was equally driving speculative tendencies where some people are changing from kwacha to dollar position.

In an interview, Sakulanda said Zambia Association of Chambers of Commerce and Industry (ZACCI) believed politics were hurting the local economy and its perception by key foreign direct investors.

"The biggest factor is perception and therefore we must deliver positive perception of the outlook of our economy, which means the politics have to play its role, they must be definitive in the statements they make, they must be consistency and give hope," he said.

"If people are hopeful that things are on the right track, things stabilize but if the political leadership always tend to create an impression that things are not going on well, not that they admitted but in the manner that they conduct themselves by issuing statements that tend to cause concern, alarm, some uncertainties…the short, long medium term solution to this is the politics. The politics can correct this because economically, this country has a good outlook."

Sakulanda said ordinarily, the country's currency could not have been deteriorating owing to the strong economic fundamentals in the country.

He said the continue dip of the local currency was hurting local businesses.

"You have a situation where you start thinking that predictability is slowly being taken out the equation, it causes anxiety because where you need K40 million to do something, you now require an additional K5 million to K6 million, and this is becoming expensive for business," said Sakulanda.

"We must always be mindful that we are a kwacha economy and being an import-oriented economy, the value of the kwacha always starts to impact prices especially with the pending rebasing of the kwacha that has also created some speculative traders wanting to hold the money in dollars although theoretically, rebasing does not change anything."

Labels: KWACHA, PF, ZACCI

posted by MrK @ 1:04 PM